So­lar? Wind? In Poland, coal is still king

▶ The coun­try’s car­bon ad­dic­tion is rooted in pol­i­tics ▶ “Very few peo­ple are will­ing to give up any ben­e­fits”

Bloomberg Businessweek (North America) - - Contents - - Ladka Bauerova and Ma­ciej Martewicz Edited by Christo­pher Power and David Rocks

The World Health Or­ga­ni­za­tion es­ti­mates that two-thirds of the Euro­pean Union’s 50 most-pol­luted cities are in Poland, largely in the min­ing re­gion of Up­per Sile­sia, where the smell of burn­ing coal lingers in the air. Un­daunted, Poland’s gov­ern­ment is dou­bling down on coal. “Build­ing more ef­fi­cient coal power plants will get us bet­ter re­sults in cut­ting CO2 emis­sions than build­ing re­new­able en­ergy sources like wind or so­lar,” says En­ergy Min­is­ter Krzysztof Tchorzewski, a mem­ber of the Law and Jus­tice party, which swept to power in Oc­to­ber with union back­ing af­ter it pledged to pre­serve min­ing jobs.

Even as other Euro­pean coun­tries shun coal, Poland is still ad­dicted, get­ting al­most 90 per­cent of its elec­tric­ity from it. That has more to do with pol­i­tics and fear of job losses than with the in­abil­ity to gen­er­ate power from other sources. Suc­ces­sive gov­ern­ments have sought to re­struc­ture the mines snaking be­neath the lush Sile­sian coun­try­side, but those ef­forts have been thwarted by unions in­tent on pre­serv­ing the coun­try’s 100,000 min­ing jobs.

Be­fore the Law and Jus­tice party gov­erned, Pol­ish com­pa­nies built plenty of wind tur­bines. In May, par­lia­ment passed a bill re­quir­ing that wind tur­bines be lo­cated far­ther away from homes, a rule that devel­op­ers say ef­fec­tively kills new projects.

With the gov­ern­ment’s en­cour­age­ment, the three big­gest pub­licly traded util­i­ties agreed to spend as much as 1.5 bil­lion zloty ($387 mil­lion) on a stake in a re­struc­tured min­ing com­pany called Pol­ska Grupa Gor­nicza. Five banks and a state com­pany will get PGG bonds in place of loan pay­ments.

PGG’S busi­ness plan as­sumes that coal prices will rise for the next cou­ple of years. “PGG has lit­tle chance of be­com­ing prof­itable,” says Ma­ciej Bukowski, pres­i­dent of War­saw think tank Wiseeu­ropa and co-au­thor of a study of the in­dus­try. He says that even if coal prices in­crease, PGG will need more cap­i­tal by 2020. And if prices re­main stag­nant and PGG doesn’t re­struc­ture fur­ther, it could face bank­ruptcy within two years. Shut­ting down money-los­ing mines and cut­ting jobs is the only long-term so­lu­tion, he says.

Some min­ers see that their way of life can’t last for­ever. Michal Piotrowski, from the Sile­sian city of Zabrze, says he quit re­tail­ing in 2012 and be­came a miner to earn more for his fam­ily. He’s dis­il­lu­sioned with what he calls a “give-it-away” cul­ture: ad­min­is­tra­tive staff who get the same free meals as min­ers un­der­ground; free heat­ing coal for re­tired min­ers; an an­nual bonus of two months’ salary. “It’s slowly chang­ing,” he says. “But very few peo­ple are will­ing to give up any ben­e­fits.”

Al­though the min­ers re­cently agreed to sus­pend part of their ben­e­fits for two years, unions say job cuts are un­ac­cept­able. Jaroslaw Grze­sik, head of the min­ing di­vi­sion of the Sol­i­dar­ity union, praises the gov­ern­ment’s de­ci­sion to pro­mote coal over re­new­ables, which, he claims, are be­ing pushed by richer coun­tries able to af­ford such projects. “We’re not a coun­try where the sun shines and wind blows all year,” he says. “We’re a coun­try rich in coal, and we should care about our econ­omy and our cit­i­zens.”

The bot­tom line Coal min­ers are a pow­er­ful force in Pol­ish pol­i­tics, and they have pre­served jobs as a re­sult.

A bull­dozer works atop a heap of coal at a mine in south­ern Poland

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